Cotton rises on export demand, planted area

General Comments: Futures were a little higher yesterday after trading both sides of unchanged. Ideas of big supplies, mostly from Brazil, keep the selling alive. Some support came from news that Colombia Coffee farmers will not deliver as they seek higher prices for crops and some support came from even more reports of severe rust damage in Central America. Reports of rust in Central America and the production cuts that it are still in the press, and rust is now reported in Peru. Central America could lose at least 20% of the total crop this year. Losses next year could be 30% or more of the crop. Current crop development is still good this year in Brazil, and production areas are getting drier weather for the developing crop. There is some talk the drier weather could stress trees. Production ideas remain big there. Vietnam producers there talk about the potential for 25% crop losses due to prolonged drought in the Central Highlands. Central America crops are mostly harvested. Colombia is reported to have good conditions.

Overnight News: Certified stocks are higher today and are about 2.709 million bags. The ICO composite price is now 131.69 ct/lb. Brazil should get mostly dry weather. Temperatures will average near to above normal. Colombia should get scattered showers, and Central America and Mexico should get mostly dry conditions. Temperatures should average near to above normal. ICE said that 0 contracts were delivered today against March futures and that total deliveries for the month are 108 contracts.

Chart Trends: Trends in New York are mixed. Support is at 137.00, 134.00, and 131.00 May, and resistance is at 145.00, 147.00, and 149.00 May. Trends in London are mixed. Support is at 2080, 2070, and 2040 May, and resistance is at 2130, 2140, and 2170 May. Trends in Sao Paulo are mixed. Support is at 177.00, 174.00, and 171.00 September, and resistance is at 183.00, 185.00, and 187.00 September.

SUGAR

General Comments: Futures closed a little higher. Chart trends in London and New York are now mixed. Big supplies of Sugarcane and Raw Sugar keep price trends in check, and the market remains in a sideways trend even though trends are trying to turn up. Production has been strong in Brazil so far this year, and reports say that the new crop production looks to be strong as well, so the diversion into more domestic ethanol use will help offset increased sugarcane production. Exports from Brazil continue to be very strong. Exports from other countries are said to be less than expected, but the Brazil offer keeps futures from doing much these days.

Overnight News: Mostly dry weather expected in Brazil. Temperatures should be near to above normal.

Chart Trends: Trends in New York are mixed. Support is at 1790, 1770, and 1740 May, and resistance is at 1860, 1875, and 1900 May. Trends in London are mixed. Support is at 513.00, 512.00, and 506.00 May, and resistance is at 520.00, 523.00, and 527.00 May.

COCOA

General Comments: Futures closed lower in consolidation trading. New York was the leader on the downside as the US Dollar moved higher. Market trends are still down overall, but futures are within about 100 dollars of a potential swing low based on the charts. Ideas are that current low prices should créate new demand and that the main crop harvest is over in Western Africa and much of Asia so that supplies on offer could also be less. The weather is forecast to be warm and dry in West Africa this week. For now, traders expect good mid crop production from West Africa. Malaysia and Indonesia crops appear to be in good condition and weather is called favorable. Traders are starting to look ahead and past the midcrop harvest and note that the market could move to a production déficit next year. More buying is being noted in deferred months at this time due to smaller production ideas for the coming crops.

Overnight News: Mostly dry conditions are expected in West Africa. Temperatures will average above normal. Malaysia and Indonesia should see episodes of scattered showers, but Malaysia will be drier this weekend. Temperatures should average near normal. Brazil will get scattered showers and warm temperatures. ICE said that 0 contracts were delivered today against March contracts and that total deliveries for the month are now 826 contracts. ICE certified stocks are lower today at 4.363 million bags.

Chart Trends: Trends in New York are down with objectives of 2050, 2020, and 1990 May. Support is at 2050, 2020, and 2000 May, with resistance at 2100, 2110, and 2130 May. Trends in London are down with objectives of 1390 and 1365 May. Support is at 1360, 1330, and 1300 May, with resistance at 1405, 1435, and 1450 May.

About the Author

Jack Scovilleis a veteran futures market analyst specializing in grains, softs, rice, oilseeds, and tropical products such as coffee and sugar. His industry contacts in South America, Europe, Asia, and North America provide him with a unique and comprehensive view of these markets. Jack began working in the futures industry over 30 years ago and spent 10 years working on the floor of the Chicago Board of Trade in various roles, starting with The PRICE Futures Group since it was established in 1988. Jack writes daily commentaries - Morning Grains and Softs, in both English and Spanish and is regularly quoted around the world by news & wire services including Dow Jones, AP, Bloomberg, and Reuters. You can contact Jack by phone at (312) 264-4322 or by email at jscoville@pricegroup.com. Learn even more on our website at www.pricegroup.com.

Futures and options trading involves substantial risk of loss and may not be suitable for everyone. The information presented by The PRICE Futures Group is from sources believed to be reliable and all information reported is subject to change without notice.